Refinance in Texas
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Guide to Refinance in Texas

A cash out refinance in Texas is available to homeowners with equity
By Shelby Mathews

In 1997, the Texas Constitution was amended to allow homeowners to refinance in Texas to get a cash out based on the amount of equity in their homesteads. The amendment provides the terms under which you may refinance the mortgage on your primary residence in Texas for the cash you need to establish a college fund for your children, create a retirement account, make home improvements, consolidate debt or for your discretionary use.

If you're thinking about refinancing, here are some of the relevant provisions of the amendment pertaining to cash out mortgages in Texas:

1. The aggregate amount of all mortgage liens on your homestead is restricted to 80% of the home’s fair market value. This means that the loan amount of the cash out refinance mortgage, plus the unpaid principal balance of any second lien with the new refinance loan, divided by the appraised value of your home must be less than or equal to 80%.

2. A cash out refinance in Texas cannot close until 12 days have elapsed since you signed the mortgage loan application. Additionally, after your sign the loan documents for the refinance, you still have 3 days to change your mind and rescind the loan.

3. The total amount of the fees for a Texas cash out refinance that a lender can collect may not exceed 3% of the loan amount.

4. If your homestead is used for agricultural purposes it is not eligible for cash out refinancing in Texas, unless it is used for milk production.

5. A lender cannot require that you pay off any debt as condition for your Texas refinance unless it is a lien on the property.

Action Steps

The best contacts and resources to help you get it done

Find out what your home is worth A Texas mortgage refinance for cash out is dependent on your home's value. Use the internet to compare your home to homes nearby with similar square footage and other characteristics to give you an idea of what your property is worth.

I recommend: Before contacting a lender about a Texas mortgage refinance, look for what houses are selling for in your area. Trulia and Zillow are both websites that give you the asking prices for homes near you, as well as recent sales. Use your county's appraisal district website as another source for finding the value of your home

Shop around for the best rate You are not obligated to do a cash out refinance in Texas with your current lender. Investigate several sources, including credit unions and banks, in addition to mortgage companies to find the best refinance rates in Texas.

I recommend: Go ahead and ask the mortgage company servicing the existing mortgage on your home what their rates are for a Texas mortgage refinance. Countrywide and Washington Mutual are two of the larger mortgage lenders in the country, but check with other sources for rates before deciding which lender to use.

Make sure cash out refinance is the best option for you Instead of a cash out mortgage, you may decide you would prefer a Home Equity Line of Credit which would allow you to take draws against the line for the amount of cash you may need at any given time.

I recommend: Capital One and Bank of America are providers of Texas refinance loans and Home Equity loans.

Tips & Tactics

Helpful advice for making the most of this Guide

Ask yourself if a cash out refinance mortgage is going to put you in a better financial position.
Don't choose to an interest only loan for your Texas home refinance. The rates will go up, and your payment will skyrocket.

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Refinance in Texas
Find Resources for Refinance in Texas. Search listings and reviews of retailers, specialists and services in your local area now.

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